Correlation Between Atlantic Coastal and ARYA Sciences

Can any of the company-specific risk be diversified away by investing in both Atlantic Coastal and ARYA Sciences at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Atlantic Coastal and ARYA Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Atlantic Coastal Acquisition and ARYA Sciences Acquisition, you can compare the effects of market volatilities on Atlantic Coastal and ARYA Sciences and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Atlantic Coastal with a short position of ARYA Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantic Coastal and ARYA Sciences.

Diversification Opportunities for Atlantic Coastal and ARYA Sciences

-0.61

Correlation Coefficient

Atlantic Coastal  ARYA Sciences

Excellent diversification

The 3 months correlation between Atlantic and ARYA is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Atlantic Coastal Acquisition and ARYA Sciences Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARYA Sciences Acquisition and Atlantic Coastal is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Atlantic Coastal Acquisition are associated (or correlated) with ARYA Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARYA Sciences Acquisition has no effect on the direction of Atlantic Coastal i.e., Atlantic Coastal and ARYA Sciences go up and down completely randomly.

Pair Corralation between Atlantic Coastal and ARYA Sciences

Assuming the 90 days horizon Atlantic Coastal Acquisition is expected to generate 0.1 times more return on investment than ARYA Sciences. However, Atlantic Coastal Acquisition is 9.63 times less risky than ARYA Sciences. It trades about 0.09 of its potential returns per unit of risk. ARYA Sciences Acquisition is currently generating about -0.04 per unit of risk. If you would invest  1,000.00  in Atlantic Coastal Acquisition on September 13, 2024 and sell it today you would earn a total of  40.00  from holding Atlantic Coastal Acquisition or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	34.45%
Values	Daily Returns

Atlantic Coastal Acquisition  vs.  ARYA Sciences Acquisition

Atlantic Coastal Acq

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlantic Coastal Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Atlantic Coastal is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ARYA Sciences Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARYA Sciences Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ARYA Sciences is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Atlantic Coastal and ARYA Sciences

The main advantage of trading using opposite Atlantic Coastal and ARYA Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlantic Coastal position performs unexpectedly, ARYA Sciences can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ARYA Sciences will offset losses from the drop in ARYA Sciences' long position.

The idea behind Atlantic Coastal Acquisition and ARYA Sciences Acquisition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.